A Study on Awareness of ESG Mutual Funds Among Retail Investors for Sustainable Investment

Abstract

This research investigates the awareness levels among retail investors in India concerning ESG (Environmental, Social, and Governance) mutual funds, the influence of demographic factors on this awareness, as well as the challenges associated with understanding ESG mutual funds. A quantitative research design was utilized, involving the distribution of a structured online questionnaire to 1,000 retail investors. This approach resulted in 350 responses, of which 200 complete responses were used for analysis. The survey gathered information regarding demographic attributes, degrees of awareness concerning ESG, main sources of information, and identified obstacles as perceived by respondents. The analysis of the data encompassed descriptive statistics, Chi-Square Goodness of Fit tests, and Kruskal-Wallis tests to evaluate awareness levels and the impact of demographic factors including age, education, and occupation. The findings indicated a notable degree of awareness regarding ESG mutual funds among retail investors (χ² = 61.600, p = 0.000). The analysis revealed that demographic factors had a significant impact on awareness, as evidenced by the results of the Kruskal-Wallis tests, which indicated significant variations based on age (p = 0.016), education (p = 0.008), and occupation (p = 0.000). The main obstacles were perceived high investment risk (58.5% agree/strongly agree), difficulty in comprehending ESG criteria (49.5% agree/strongly agree), and inadequate information (66% agree/strongly agree). The findings indicate that although there is an increasing awareness of ESG mutual funds, demographic disparities and various barriers hamper wider adoption. To effectively tackle these challenges, implementing focused educational initiatives and streamlining ESG communication may significantly improve retail investor engagement and foster sustainable investment practices.